This is the final part of a 3-part blog about handling water damage in your apartment. In this article, we go over liability and what the Association’s insurance policy covers.
If an upstairs unit’s washing machine, refrigerator, shower, toilet, etc. fails and causes water damage to the neighbor downstairs, who pays for the damage? If this happens, both owners should report the incident to their respective HO6 companies. If there is building damage, the association will report the incident to the master policy. The owner of the upstairs unit will be assessed the first $5,000 of water extraction bills and building damage (not including upgrades). The upstairs owner should have loss assessment coverage for this. The association’s policy will pay for damage in excess of the deductible for the unit as built. Each owner’s respective HO6 policy will pay for their client’s upgrades, contents, and loss of use.1
Other policy conditions to keep in mind:2
- The Association does NOT pay the deductible to the homeowner unless the cause of the damage is determined to have originated from a common element of the building, in which case the Board will review each claim on a case by case basis and consider reimbursement to the homeowner for the deductible amount on his/her individual policy.
- The Association is NOT an insurer of unit owners. The Association is NOT responsible for uninsured damage to a unit simply because the problem originated in, on or from the common elements. Instead, the Association is only liable for the deductible amount if negligence on its part, as determined by competent legal authority (i.e. court), caused the problem. Therefore, the Association is NOT liable for damage caused to an apartment by a common element, such as an overflow from the building’s drain line, pipe leaking, etc.
Remember, there is no liability associated with a property claim. The restoration company simply asks the following questions:
- Did the claim happen during the term of the policy?
- Is it a covered peril?
- Is the claim above the Association’s deductible?
If all the above are true, the Association does provide coverage.
Of course, the best way to reduce the number of insurance claims for water damage is to take a proactive approach. You should consult with your plumber on performing periodic inspections and replacements of things like toilet wax rings, shower pans, and water hoses and pipes within your unit.
We hope this 3-part blog has been useful and informative. If you have further questions, contact the Board or attend one of our monthly meetings.
1. All Owners Should have Proper HO6 Coverage (Insurance Associates)
2. Claim Policy (Insurance Associates)